- One oil company has a prize high quality asset base
- EV battery supply chain leader has seen its valuation pull back
Rising earnings per share forecasts might seem a confusing anomaly given the S&P 500 is now in bear territory. As noted by Liz Ann Sonders, Chief Investment Strategist at Charles Schwab, something similar was observed in the bear market of the early 2000s. It took time for earnings to peak after the market did.
Having been the standout sector in the first half of the year, energy stocks have sold off hard. Does this pull-back signal an attractive entry point or, as in the early 2000s, does the market have further to fall? The three companies analyst Neil Wilson discusses in this week's Alpha report all have secular drivers but prices may be pulled around more by the market.
Timing isn't the primary concern for long-term investments but clearly, no investor wants to be in a position of trying to recover losses right away. Therefore, although these long-term opportunities are cheaper than in the recent past, it may be more sensible to dollar cost average (in layman terms drip-feed) when building a position. As Neil highlights in his summary, these three companies have plenty to recommend them, so are worthy of being on a watchlist.
Neil says: "Two are well placed to benefit from high oil prices and a structural shift in energy investment trends, whilst the third is a play on the growing electric vehicle market."
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